What Are Sinking Funds ?

I get this questioned asked a lot and I felt it was time for me to talk about it. Sinking funds are another word for Saving Accounts. 

Sinking Funds = Savings Accounts 

Its saving for something specific weather it’s more of a long-term saving goal or saving for a bill, like car insurance that is due in 6 months. So instead of someone paying a large bill, six months car insurance bill, you would in fact save every month so when the 6 months is up you already have the money saved and set aside, and it’s not a burden on you.

The same goes for Christmas. I was terrible at this, every year I would rack up so much credit card debt, and just spend aimlessly and the new year would come, and I'd be trying to pay catch up. Do you know what I mean? Some other common examples of sinking funds are home repairs, medical expenses, vacations, Christmas gifts, building an emergency fund, or even an Amazon prime membership. 

Why do I need a Sinking Fund? 

Picture this: you open your mailbox, see a bill, and suddenly you need $700 for a car insurance premium! If you don’t have the money, what’s the first thing you do? Pull out your credit card, and into debt you go! It’s disheartening, to say the least. 

But how about this instead of borrowing money, you just set aside a manageable amount for several months to reach your goal. The bill arrives, and you have money sitting there ready to pay for it. 

I currently have quite a few, I'll list them out, emergency, Christmas/birthdays, vacation, 2nd savings, clothing, planners, business, grandbaby, credit cards. I had one for office, and I saved $1500 and finally redid my home office. That was an accomplishment, but ultimately it felt good to have it set aside. When I was ready to act, I purchased what I needed. 

Benefits of having a sinking funds

You’re planning for purchases, so you have time to think about which TV is the best, or what your mom really wants for her birthday. In essence, you’re more mindful of your purchase so you’re likely to make a better choice and not just snatch up something halfway decent at the last moment. 

They say that “getting there” is half the fun, right? So, when you have a savings goal tracker, let’s say for vacation, it’s a lot of fun to color in that next spot! For me its writing it out. Keeping track makes the challenge exciting. It’s building the excitement, the anticipation. And besides, each time you fill in a segment you are damn proud of all your hard work! (Way to go!) Like I tell people, it’s like a challenge for me. Not only that I don't stress when Christmas comes. And that in itself what overwhelming. So I see the accomplishments. 

Each person and lifestyle are different so I do recommend looking at your checking accoun for the last 3 months so you can see your expenses. It all depends on when you get paid and how much you want to save towards each fund. This is different for every person. For me Christmas I like to have at least $1800 thats for gifts, and food, and I save all year to reach that goal. 

All my funds are in my credit union because I can name each one. So, when I get paid, I pay my bills, and variable expenses and then transfer money to my sinking fund accts. I use the new inserts from Milrose Notes. We did a collab together and it came out wonderful. I am so pleased with the results. But the first thing is to figure what sinking fund accounts you want to create, and then how much you'll put in every payday. If your new to budgeting or sinking funds, take a look at the inserts so you can keep track.. If you'd like to set up a consult on getting started please contact me. I will up including a page for consult appts. 

 (Christina15 to save )